Real Estate- An emerging investment alternative

Real Estate- An emerging investment alternative

Real Estate has been gaining more and more popularity with each passing day to become a reliable choice of investment for Indians. Real estate investments include investing in land, residential and commercial properties, retail spaces, hotels and restaurant spaces, healthcare and hospital spaces, factories, etc. In metropolitan areas there have been a surge of urbanized spaces like co-living and co-working spaces, and buying properties as such is also considered a good real estate investment. If you are an avid investor, then you must already know that diversifying your portfolio mitigates the risk of losing your money. There is a higher chance for you to get great returns on your money by investing judiciously in stocks, bonds and real estate in good proportions. This way you can ensure that you are not relying on a particular market trend for your money to grow. Real estate is an appreciating asset that is worth spending your money on. We will take you through some of the biggest advantages of choosing real estate as an alternative investment. The potential to leverage your investment, appreciation, tax benefits, regular cash flow and financial security are some of the numerous benefits that will come your way from investing in real estate.

1. You Can Leverage Your Investment

Leveraging is a financial term that denotes using borrowed capital to consequently increase return on investment. So, what does leveraging your investment in terms of real estate mean? It means that you could easily invest in a property without having to pay the whole amount that the property is worth. Financing the rest of the money is easy if you have a stable income and good credit score. There are home loans that are readily available, whereby you could pay the loan, little by little, over the years. Investing in stocks, you cannot leverage your investment. You have to pay every penny the stock is worth. Moreover, your return on investment is good with real estate because it is an appreciating asset.

2. You Can Force Appreciation

In real estate price appreciation refers to the increase in the value of the property over a course of time. Like any other investment, getting the best ROIs is the goal along with maintaining a margin of profit when the investor decides to sell the property. Due to surging demand for property, real estate appreciates quite naturally, and by the end of 2022 the real estate sector is predicted to experience a growth of 5% of capital value in the residential segment. In addition, with real estate you can force appreciation. Small renovations made to the property can compound into real appreciation of its value in the market. For instance, in the case of residential properties, furnishing and making provisions for dedicated spaces can increase the value of the house. Adding rooms or basements, renovating the kitchen and bathrooms add more value. Similarly in case of commercial or residential properties, adding cabins and constructing common areas can help you sell your property with greater profits.

3. You Can Earn Regular Cash Flow

Cash flow is the amount of money that your real estate investment generates after your debt is repaid and management expenses are made. One of the biggest benefits of investing in real estate is the ability to generate cash flow. The easiest way of earning money from your residential property is by renting it out to tenants. There are small costs of repair and management that you might have to bear as an owner, but that is always outweighed by the income that you make on the rent money. Commercial properties can be rented out to companies looking for modern office spaces, or they could be rented to restaurant and café owners. In that case, you are not required to carry out maintenance and upkeep and yet you can generate cash regular cash flow on your investment.

4. You Can feel Financially Secure

The stock market is volatile with fluctuating stock values. Investing in stocks comes with its own share of perks, but not when it comes to a sense of financial security. Even in times of economic recessions, real estate has the potential to act as inflation hedge. They are considered safety nets in the world of investments because of the positive relationship between GDP growth and demand for real estate. Moreover, investing in property for the long-term also ensures that if there’s any chance that real estate lost some value along the way it has time to bounce back. Many people buy property to sustain them during their years of retirement. The demand for properties makes them easier to sell, or the income from renting out the property can cover the daily expenses of the retired person.

There is little to no reason to fear investing in real estate. They provide security, safety, best returns and can generate cash flow even during times of inflation. Real estate is a booming market in India and is proving to be a stable emerging investment alternative. If you are investing for the long-run it is worth considering investing in property standing in the present economy.